Rio Tinto reported their June quarter production which was in line with market consensus.
If we assume a slight softening in Iron Ore prices next year, (back below US$100 per tonne), RIO will produce $45bn in FY20 revenue and generate EBITDA of $20bn. Underlying reported FY20 profit will be $10bn, which will sustain a 5.5% yield based on dividends per share of $4.50.
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Within the resource space, we continue to prefer BHP over RIO and within the energy complex WPL and ORG.
We also like the look of Oz Minerals.
